Jan. 5 (Bloomberg) -- The euro fell to an 11-year low against the yen and the weakest level in 15 months versus the dollar on concern Europe’s debt crisis is worsening and as reports showed the U.S. labor market is strengthening.

The 17-nation currency weakened against most major peers after France’s borrowing costs rose at a bond sale today as credit-rating companies threaten to cut the nation’s top AAA ranking. Sterling strengthened to a 15-month high versus the euro. The Australian and New Zealand dollars dropped against the greenback for a second day as investors sought safer assets.

"Europe trumps better U.S. data right now,” said Boris Schlossberg, director of research at the online currency trader GFT Forex in New York. “The market is very concerned about the sovereign debt and also the bank debt on the European side. Sentiment is very dour.”

The euro fell 0.7 percent to 98.63 yen at 5 p.m. New York time, after reaching 98.48 yen earlier, its weakest since December 2000. It dropped 1.2 percent to $1.2789, tumbling below $1.28 for the first time since Sept. 13, 2010, and touching $1.2771. The dollar appreciated 0.5 percent to 77.12 yen.

The pound rose to its highest level against the euro since September 2010, reaching 82.50 pence before trading at 82.53 pence, up 0.4 percent. It depreciated 0.8 percent to $1.5495.

'Significant Downside Risk’

"The market is very cognizant and has been for quite some time that there’s some very significant downside risk as far as the euro is concerned,” Alan Ruskin, global head of Group-of-10 foreign-exchange strategy at Deutsche Bank AG in New York, said today during an interview on Bloomberg Television’s “In the Loop” with Betty Liu. “Increasingly they’re putting their money where their thoughts are. You’re seeing the euro really trade quite weak against a host of currencies.”

A 7.5 billion-euro ($9.7 billion) share offer announced yesterday by UniCredit SpA, Italy’s biggest bank, spurred concern European banks may struggle to raise more capital to weather the sovereign-debt crisis. UniCredit owns about 39 billion euros of Italian government bonds.

The dollar extended gains versus the euro after ADP Employer Services reported U.S. companies added 325,000 workers in December, beating the highest projection in a Bloomberg News survey and following a revised 204,000 gain the prior month. The median estimate was for a gain of 178,000. A government report tomorrow will show U.S. nonfarm payrolls swelled by 155,000 positions last month, compared with a gain of 120,000 in November, according to another Bloomberg survey.

U.S. Jobless Claims

Initial claims for jobless benefits in the U.S. decreased 15,000 in the week ended Dec. 31 to 372,000, Labor Department data showed. The median estimate in a Bloomberg poll forecast 375,000 claims.

The Institute for Supply Management’s index of U.S. non- manufacturing industries, which account for about 90 percent of the economy, rose to 52.6 in December from 52 a month earlier. A Bloomberg poll forecast the Tempe, Arizona-based group’s measure would rise to 53. Fifty is the dividing line between contraction and expansion.

The euro dropped as France sold 4.02 billion euros of benchmark 10-year bonds at an average yield of 3.29 percent, compared with 3.18 percent at a sale on Dec. 1. The 10-year debt bid-to-cover ratio, or the number of bids received for each unit of debt sold, fell to 1.64 from 3.05. In all, France auctioned 7.96 billion euros of debt today, including bonds maturing in 2023, 2035 and 2041.

France’s credit outlook was lowered by Fitch Ratings on Dec. 16 on the “heightened risk of contingent liabilities” from the escalating euro-region crisis.

'Not in the Mood’

"There are more downgrade rumors doing the rounds,” said Jeremy Stretch, executive director of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London. “So while France may have passed this hurdle, the market is not in the mood to give the euro any credit.”

S&P is reviewing the top ratings of both France and Germany and said last month that the euro zone’s rescue fund, the European Financial Stability Facility, may lose its top credit rating should one of its AAA rated guarantors, which include France and Germany, be downgraded.

The Australian dollar fell against its U.S. counterpart after a report showed the nation’s trade surplus unexpectedly narrowed in November as shipments abroad of resources slowed.

Exports exceeded imports by A$1.38 billion ($1.4 billion), from a revised A$1.42 billion surplus in October, the Bureau of Statistics said. That compared with the median estimate for a surplus of A$1.65 billion.

The Aussie weakened 1 percent to $1.0264, while New Zealand’s dollar dropped 0.9 percent to 78.08 U.S. cents.

Forint Pares Losses

Hungary’s forint slid to a record low against the euro before paring losses after the government said it’s ready to discuss conditions for an International Monetary Fund loan and wants to reach a deal quickly.

Talks for Hungary’s second bailout in four years broke down last month as Prime Minister Viktor Orban refused to abandon a central bank law that the EU said threatens the monetary authority’s independence.

Jan. 5 (Bloomberg) -- The euro fell to an 11-year low against the yen and the weakest level in 15 months versus the dollar on concern Europe’s debt crisis is worsening and as reports showed the U.S. labor market is strengthening.

The 17-nation currency weakened against most major peers after France’s borrowing costs rose at a bond sale today as credit-rating companies threaten to cut the nation’s top AAA ranking. Sterling strengthened to a 15-month high versus the euro. The Australian and New Zealand dollars dropped against the greenback for a second day as investors sought safer assets.

"Europe trumps better U.S. data right now,” said Boris Schlossberg, director of research at the online currency trader GFT Forex in New York. “The market is very concerned about the sovereign debt and also the bank debt on the European side. Sentiment is very dour.”

The euro fell 0.7 percent to 98.63 yen at 5 p.m. New York time, after reaching 98.48 yen earlier, its weakest since December 2000. It dropped 1.2 percent to $1.2789, tumbling below $1.28 for the first time since Sept. 13, 2010, and touching $1.2771. The dollar appreciated 0.5 percent to 77.12 yen.

The pound rose to its highest level against the euro since September 2010, reaching 82.50 pence before trading at 82.53 pence, up 0.4 percent. It depreciated 0.8 percent to $1.5495.

'Significant Downside Risk’

"The market is very cognizant and has been for quite some time that there’s some very significant downside risk as far as the euro is concerned,” Alan Ruskin, global head of Group-of-10 foreign-exchange strategy at Deutsche Bank AG in New York, said today during an interview on Bloomberg Television’s “In the Loop” with Betty Liu. “Increasingly they’re putting their money where their thoughts are. You’re seeing the euro really trade quite weak against a host of currencies.”

A 7.5 billion-euro ($9.7 billion) share offer announced yesterday by UniCredit SpA, Italy’s biggest bank, spurred concern European banks may struggle to raise more capital to weather the sovereign-debt crisis. UniCredit owns about 39 billion euros of Italian government bonds.

The dollar extended gains versus the euro after ADP Employer Services reported U.S. companies added 325,000 workers in December, beating the highest projection in a Bloomberg News survey and following a revised 204,000 gain the prior month. The median estimate was for a gain of 178,000. A government report tomorrow will show U.S. nonfarm payrolls swelled by 155,000 positions last month, compared with a gain of 120,000 in November, according to another Bloomberg survey.

U.S. Jobless Claims

Initial claims for jobless benefits in the U.S. decreased 15,000 in the week ended Dec. 31 to 372,000, Labor Department data showed. The median estimate in a Bloomberg poll forecast 375,000 claims.

The Institute for Supply Management’s index of U.S. non- manufacturing industries, which account for about 90 percent of the economy, rose to 52.6 in December from 52 a month earlier. A Bloomberg poll forecast the Tempe, Arizona-based group’s measure would rise to 53. Fifty is the dividing line between contraction and expansion.

The euro dropped as France sold 4.02 billion euros of benchmark 10-year bonds at an average yield of 3.29 percent, compared with 3.18 percent at a sale on Dec. 1. The 10-year debt bid-to-cover ratio, or the number of bids received for each unit of debt sold, fell to 1.64 from 3.05. In all, France auctioned 7.96 billion euros of debt today, including bonds maturing in 2023, 2035 and 2041.

France’s credit outlook was lowered by Fitch Ratings on Dec. 16 on the “heightened risk of contingent liabilities” from the escalating euro-region crisis.

'Not in the Mood’

"There are more downgrade rumors doing the rounds,” said Jeremy Stretch, executive director of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London. “So while France may have passed this hurdle, the market is not in the mood to give the euro any credit.”

S&P is reviewing the top ratings of both France and Germany and said last month that the euro zone’s rescue fund, the European Financial Stability Facility, may lose its top credit rating should one of its AAA rated guarantors, which include France and Germany, be downgraded.

The Australian dollar fell against its U.S. counterpart after a report showed the nation’s trade surplus unexpectedly narrowed in November as shipments abroad of resources slowed.

Exports exceeded imports by A$1.38 billion ($1.4 billion), from a revised A$1.42 billion surplus in October, the Bureau of Statistics said. That compared with the median estimate for a surplus of A$1.65 billion.

The Aussie weakened 1 percent to $1.0264, while New Zealand’s dollar dropped 0.9 percent to 78.08 U.S. cents.

Forint Pares Losses

Hungary’s forint slid to a record low against the euro before paring losses after the government said it’s ready to discuss conditions for an International Monetary Fund loan and wants to reach a deal quickly.

Talks for Hungary’s second bailout in four years broke down last month as Prime Minister Viktor Orban refused to abandon a central bank law that the EU said threatens the monetary authority’s independence.